Germany payroll tax. German average salary after tax

Payroll tax is levied in Germany as a form of income tax on self-employment income. If a person is registered at the workplace as an employee, then he pays the corresponding amount of profit in favor of the state. More precisely, the employer calculates payments from employee income and transfers the corresponding amount directly to the tax office.

In the framework of this article, we will consider the answer to the question: “What is the salary tax in Germany?”

general information

Income tax in Germany can be called the most popular source of budget revenues. It provides almost 40% of all budget revenues. The procedure for calculating these values ​​has nothing to do with our system. In determining them, the following factors are used:

• the presence of children;
• marital status;
• salaries of both spouses.

All individuals who live in Germany for more than 180 days are tax residents. If they receive income, they are obliged to make appropriate deductions from their salaries.

In Germany, this tax is distributed among the budgets as follows:

• 42.5% - to the state;
• 42.5% - to the treasury of the federal state;
• 15% to the local budget.

The German Salary Tax Act states that every employee who receives pay at the place of employment and resides in Germany must transfer the amount of his income. There are six types of payroll fees in which employees can be classified according to allowance and deductions.

Consider what taxes are paid in Germany on wages:

• individual income tax;
• church tax;
• solidarity tax;
• medical insurance;
• pension insurance;
• insurance in case of need for care;
• unemployment insurance benefits.

The taxable base for accruals are the following categories:

• salary;
• conducting business activities;
• self-employed income;
• fishing and agriculture;
• operations with capital;
• rental of real estate;
• Property For Sale.

Bids can be determined taking into account the following points:

1. To calculate how much taxes workers should pay, special classes (gradations) were introduced in Germany.

2. There are six bets in total.

3. There is an electronic procedure for calculating payments.

Net Wage Calculation: Gross and Net

Consider how salaries are determined in Germany after taxes.

Net salary is defined as the amount that remains in the hands of an employee after deducting social expenses and taxes. These social security contributions are paid by the employer to the responsible authorities. The amount of contributions to the state is the difference between the gross and net wages.

The average income in Germany for full-time employees is about 40,000 euros per year. However, social contributions and taxes of about 15,000 euros are deducted from this value in the calculation of net wages. The level of social security and taxation is often criticized and especially difficult for the middle class. Particular attention is paid to payroll tax, as a form of income collection. Thus, the average pay to the working population in Germany, taking into account contributions, is about 25,000 euros.

The country has a progressive scale of taxation on salaries, that is, the more payments to employees, the higher the amount of contributions to the state.

Rates can be varied. The percentage of taxes in Germany starts at 14% and ends at 45%.

Calculation by the employer

The German tax system implies that the net payment is calculated by the employer independently. It is he who transfers the social security and health insurance contributions to the responsible authority. Tax deductions are also paid to the local inspection by the company where the employee works. Gross and net salaries are indicated in statements with social and tax contributions paid. To calculate the net amount, the employer uses specialized computer programs and transfers these values ​​to the payroll.

Payroll - Note

Important components of labor benefits are not only the amount of accruals and benefits, but also formal information regarding the employer and labor relations. The name and address of the organization must also be indicated on the statement, as well as the date of birth and employee identification number. Important data that should never be overlooked include policy number and start of employment. The accounting billing period should contain data on social insurance, tax days, as well as an indication of the class and number of child benefits.

The standard payroll provides information on the recipient of the total social security contribution. After deducting all the amounts, the difference shows the employee’s net income.

German average salary, net of taxes

In the table below you can find information about the current average wage in Germany. It is taken from a source from the Federal Office for Statistics of Germany. The table shows the gross amount before tax and full-time taxes. The calculations are based on data on the amount of income of citizens of the country for one month of work, which amounts to 3,771.00 euros. The average salary is calculated for the secondary sector of the German economy, which includes manufacturing, construction and services. In the calculations, the amounts do not contain lump sum payments and benefits.

The average salary in Germany after tax for 2018 in euros

The average full-time salary in Germany after full-time taxes in the secondary sector is € 3,771.00.

Imagine the net salary, the amount of net payments to employees after social and tax deductions. According to the Federal Office for Statistics of Germany, the net payments in Germany for 2018 with full employment range from 59% to 67% of the gross value, depending on whether the employee has children. The average can be taken in the amount of 64%. The table below shows the average net wages in the country.

2018 net pay in Germany to working citizens in euros

Explanation of tables:

• annual amount - a value multiplied by 12;
• weekly - the salary is divided by 4;
• hourly - payment is divided by 160.

Class Information

Starting January 1, 2013, the corresponding salary tax class in Germany was registered in the functions of the electronic calculation of income tax. This procedure replaced the calculations of the amounts that were carried out in paper form.

Using automatic calculation procedures and a table of tax deductions, you can determine the appropriate class of employees in Germany, as well as the size of payments to the state. This table shows what salary tax in Germany should be levied on an employee, which tax class corresponds to which income.

Class Overview

Percentage tax in Germany on the salary depends on the class.

Each of the six classes is focused on a separate group of people. The exact breakdown is presented in the table below.

To get a new class, you must file a written application with the tax authority.

The transition from one rank to another is usually possible only once a year by visiting the inspection.

All classes from the table have different characteristics. Let's consider them in more detail.

Salary class 1

Consider how much tax in Germany on salary is paid in class 1.

For tax classes 1 and 4, the same deductions apply. This category is intended for single or divorced workers. This group of income tax includes even those who are married, who permanently live separately from their spouse or have a spouse who lives abroad.

Employees whose husband / wife died before January 1, 2014 also have tax class 1 from 2015. The same applies to employees who live in a registered partnership or are subject to a limited income tax. Again, deductions from tax class 1 are identical to those from fourth-class income tax.

Salary Class 2

Consider how much taxes are paid on salaries in Germany in the second class.

The second class from the list is intended for employees who are one of the parents. They are entitled to a benefit, therefore they belong to tax class 2.

In order for such an allowance to be provided to one employee, he must have at least one child. In this situation, the employee has the right to the amount of payments for the child who must live with the parent. In addition, this child must be registered at the employee’s primary place of residence.

Salary Class 3

The salary in Germany, deducting taxes for the third class, has its own criteria. The third group of taxes relates to married workers who both permanently reside in the country and do not permanently live separately from each other. If one of them does not receive a salary or salary, then he must be assigned to tax class 5, the other spouse automatically belongs to class 3.

Since 2010, couples can choose a combination of tax codes 4/4, 3/5. However, this method is only possible for class 4. If the combination 3/5 is selected, then this possibility will be excluded. In the selection procedure, each spouse is entitled to a basic allowance depending on their gross income.

A factor that is individually determined by the tax office for the spouses is decisive for this separation process.

Since 2013, widowed workers also join this class 3 group if the spouse died after December 31, 2011.

Salary Class 4

In the fourth grade, both spouses must receive wages, they cannot permanently live separately from each other and must live in Germany.

Class 4 has comparable deductions to first-class tax. However, there is an added child allowance of about 3,624 euros. The limit on income tax without children in 2018 is 11,822.99 euros.

Salary class 5

Payroll tax class 5 is similar to group 3. The fifth tax class from the review is also intended for spouses. If one of the two partners is subject to tax class 3 at the request of both spouses, the other is transferred from category 4 to tax group 5. From the review of tax classes it is already clear that categories 3 and 5 are intended for spouses, whose salaries vary significantly.

The class table indicates that tax code 5 applies to a partner who earns less. Accordingly, deductions for tax categories differ significantly: the payroll tax limit in the 5th grade in 2018 corresponds to the amount of 1272.99 euros.

Salary class 6

The sixth and last salary class in the table is intended for employees who receive income from several employers at the same time. The employee must be deducted the tax by the employer paying the lower amount.

Even retirees who want to continue to work and still receive a pension belong to the sixth tax class. The tax in this category is especially high, since there are no benefits.

Deductions

In Germany, special tax deductions are also provided, which reduce the burden on employees' salaries.

These include the following expenses:

• alimony;
• expenses of a single parent on raising a child up to 16 years old;
• payment for training for yourself and advanced training;
• insurance and charitable contributions to German institutions;
• work expenses;
• extraordinary expenses.

Payroll tax and insurance rates

Income tax of various classes is partially related to whether the employee is legally or individually insured. For employees who are subject to compulsory insurance, deductions for medical insurance in the first of the tax classes are 14.6 percent. Individually insured workers usually have to pay higher percentages in Germany.

It should be noted that in this country there is also a non-taxable minimum of 10,000 euros per person per year. For example, if the total family income does not exceed 18,000 euros per year, they are exempt from all types of payments. That is, the principle is this: the more a person earns, the more he pays.

How does the tax office calculate the amount of income tax?

The tax inspectorate has the task of collecting the amounts of payments in favor of the state. She must ensure that no mistakes are made that result in the state refusing the income to which it is entitled. Thus, the payroll tax is designed to withhold amounts from the wages of the working population. The state receives part of the deductions due to it directly from the source - the employer. He is also liable to the treasury for excessively small amounts of withheld and paid income tax. The reverse situation is also possible when the employee has a claim to the overpayment inspection, which also requires confirmation.

How to return excessive payroll tax?

The employer calculates the amount of taxes in Germany according to two components: official employment tax tables (for allowances, lump sums, etc.) and personal individual tax benefits (for example, class, child allowances). At the end of the year, excessively collected amounts can be returned on the declaration. You can use special software or hire an accountant to resolve this issue on the preparation of the declaration.

If an employee does not want to file a declaration, he should at least ensure that his deductions are accurate and that there are no situations of over-payment of amounts.

Tax payroll calculator for workers and self-employed

Salary and tax, solidarity and health care premiums, long-term services, pensions and unemployment insurance reduce the employee’s net salary. If an employee wants to understand what the deductions from the gross salary are and how these values ​​change with increasing income, he can get an answer using the payroll tax calculator.

The tax return is filed by the employee on his own, filled out manually, or on special forms or using computer software. Difficulties arise when an employee has additional earnings. In such a situation, when filling out reports it is better to resort to the help of a specialist. If an employee submits a report to the inspection himself, then the deadlines for submission are set earlier (six months difference) than in a situation where the expert is engaged in documentation.

Two groups of information can be distinguished in the declaration: the amount of taxes themselves and social contributions. In addition to other taxes, a joint contribution and church tax are added.

Thus, in the framework of this article, we examined the answer to the question: “What is the tax on salaries in Germany?”